Today marks one year since the passage of the American Rescue Plan Act (ARP), which included $39 billion in dedicated federal funding for child care and offered a lifeline to the nation’s early education sector amid a pandemic that was devastating to an already-failing industry. Without question, the entirety of the relief funding passed by Congress during the COVID crisis, including ARP,  was incredibly effective in stabilizing the child care market and preventing it from collapsing. 

“Federal relief through the American Rescue Plan offered the nation’s families and businesses, including child care providers, an economic lifeline that they desperately needed,” said First Five Years Fund Executive Director Sarah Rittling. “The federal government’s role in keeping tens of thousands of child care providers in business also put a bright spotlight on the existential flaws of America’s early learning system that had made it so vulnerable in the first place. There’s no question federal relief funding prevented a very bad child care crisis from becoming immeasurably worse. We also know that, unlike other industries, the child care market is not recovering at the same rate as other essential parts of America’s economy. 

“But our goal cannot be to return the child care industry to the pre-pandemic status quo, which was already failing to meet the needs of parents, providers, and businesses alike. Now that this crucial, temporary funding has done its job and prevented the pandemic from completely destabilizing the child care sector, Congress must look to building a strong, stable early learning system worthy of America’s children and families. Given how essential child care is to our economy, lawmakers must bring the same sense of urgency to child care and pre-K through reconciliation that they did to pandemic relief.”

In March of 2020, child care businesses began closing at a record speed due to instant loss of revenue caused by the COVID-19 health and economic crisis. During the first year of the pandemic, nearly 16,000 child care providers closed their doors for good. Those that were able to stay in business were forced to navigate unpredictable temporary closures and destabilizing uncertainty amid low enrollment and increased health and safety expenses. By December of 2020, almost half of America’s child care providers (42%) reported taking on debt for their programs by putting supplies or other items on their own personal credit cards. By that point, one in four child care centers and one in three family child care homes said they would have to close within the three months without relief.

Early in the pandemic, FFYF formed a coalition with our partners and helped lead the campaign to ensure federal lawmakers prioritized and addressed the needs of child care providers and families in the COVID-19 economic recovery effort. 

Recognizing the tremendous needs in the child care industry and the essential role of child care in the country’s economic recovery, the ARP included supplemental funding for states to provide child care assistance to working families, including essential workers who may not have qualified for federal child care benefits before the pandemic, and stabilization grants to child care providers to help maintain the pre-pandemic supply of child care. A year after its passage, the ARP has provided critical relief to families who rely on child care and to a child care industry that would have completely collapsed without an infusion of emergency funding provided by Congress and the administration. 

  • new analysis from The Century Foundation has found that the American Rescue Plan funds — building on the earlier federal COVID-19 relief funds — helped temporarily prevent nearly 75,000 permanent child care closures, saving more than 3 million spots, or one-third of the nation’s total child care spots,  for young children.
  • A February 2022 survey shows that of those who received stabilization grants, 92 percent said that the funding kept their program from permanently closing. 
  • Nearly half of providers reported using child care relief to pay off debt they took on in the course of the pandemic
  • Just this month, shortly after many ARP stabilization grants began going out the door, child care employment numbers have seen their first significant rebound since the beginning of the pandemic. 

While these numbers are encouraging, the money from the American Rescue Plan is temporary and does not address the long-term existential flaws that set America’s child care system up for failure in the first place. 

  • Despite strong jobs growth in February, the child care sector remains 100,000 jobs below Feb. 2020 levels, even as the rest of the economy recovers at a rapid pace.
  • 75% of child care providers reported that the end of federal relief would have a negative or highly negative effect on their programs.
  • 89% of providers who are aware of the child care & pre-K provisions in Build Back Better agreed that it would “secure the future of our program,” including 86% of respondents from family child care homes and 85% of respondents from faith-based programs.
  • majority of both red and blue state governors have used their 2022 State of the State addresses to highlight that investing in and expanding child care is one of the best ways to get parents into, or back into, the workforce and help the economy
    • Of those, 1 in 5 detailed how critical emergency federal funds were to helping working families and the child care sector weather the pandemic.
  • Unless Congress passes significant early learning investments and reforms, like those included in the Build Back Better Act, relief funding will expire and providers will return to the status quo, charging families $10-20,000 a year and paying teachers $12 an hour, perpetuating a broken child care system that sets up everyone involved for failure.